Acetic Acid and Ethyl Acetate prices gain momentum in India – 30 May 2014

The bulk prices of Acetic Acid within Indian market have marginally moved up and down within the past week on account of various macro and micro economic indicators. This review takes a quick look at the various factors impacting Acetic Acid and its downstream derivate Ethyl Acetate within the Indian market context

This month, the bulk price of Acetic Acid reached as high as levels of Rs. 43-44 per kg (exclusive of all taxes) Ex- Mumbai, during the first week of May. However, the prices haven't stabilized at that trading range, and since then the prices have been escalating down to stable range of Rs. 39.5- 40 per kg (exclusive of all taxes), on account of weak to moderate demand in various Indian markets.

However, in the beginning of the week the prices dipped to levels of Rs. 37.5 per kg (exclusive of all taxes) on account of deprecation of the Rupee. But presently , the price have gained momentum to trading range of Rs. 41 per kg Ex- Mumbai and Rs. 40.5 per kg Ex- Kandla, once again on account of appreciation of the Indian rupee. In addition, there are some market participants who are of the view that the prices have escalated on account of temporary short supply of the chemical, in bulk market.

However, the websites market reporters gather from various sources that the importers have good stock position of Acetic Acid, but the brokers and trader level market participants don't have any stocks of the chemical, hence the rumor mill of a short supply is doing the rounds in some trading hubs in India.

In the future, there is a market expectation that the price of Acetic Acid would go down on account of huge import shipments hitting Indian shores within the coming weeks and weak offtake to compensate for the surge in supplies. A prominent Ahmedabad based trader told the website, "The price is expected to reach to levels of Rs. 35 per kg as huge consignments are coming into Indian Shores within some weeks".

In line with the recent price hike for Acetic Acid, Ethyl Acetate prices have also gained immediate price momentum. The website gathers that while Jubliant Life Sciences Limited (JLSL) hasn't done an upward price revision for Ethyl Acetate, most traders in the market are purchasing the chemical at a premium of Rs. 3-4 per kg on the current basic price of Rs.64 per kg (exclusive of all taxes), according to a market insider.

In the long run, there are strong indictors of a price decline for Acetic Acid, unless and until the demand for the chemical picks up. Meanwhile, the price path of Ethyl Acetate will closely follow that of its feedstock in the Indian markets.